Irvine Co., Developer to Build $80.5-Million Retail Center in Tustin
A new 800,000-square-foot shopping center that is expected to generate about 1,400 new jobs and $600,000 in annual tax revenue within five years will be built in Tustin by the Irvine Co. and a Costa Mesa developer, an Irvine Co. official said Wednesday.
Construction will start this summer on the $80.5-million shopping center--part of the Tustin Ranch project, which includes a 15-year plan to build 9,000 single- and multifamily homes and a 250-room hotel on Irvine Co. property in Tustin.
The shopping center is one of the key components of a five-year, $750-million retail growth plan that will make the Newport Beach-based Irvine Co. the biggest retail developer in Orange County.
Tustin Ranch is a joint venture between the Irvine Co. and Donahue Schriber, a Costa Mesa-based retail development firm that will manage and lease the center. The Irvine Co. is donating the 120-acre parcel and will own the center after it is built.
Myford Road Site
The center, to be built on a site along the east side of the Santa Ana Freeway (Interstate 5) at Myford Road, will be the first of its kind in Orange County. It will cater to upscale bargain hunters from Tustin and Irvine by featuring high-volume chains such as Home Depot, Crown Books, Toys ‘R’ Us and Circuit City. None of those particular chains, however, were identified by the Irvine Co. as actual tenants.
William A. Huston, Tustin’s city administrator, explained that the city originally wanted a conventional regional center with major, full-price retailers. “Everyone wants one of those, but there aren’t enough to go around,” Huston said.
Instead, marketing studies indicated there is more demand for a project with big, high-volume merchants who operate by combining low margins with heavy advertising, said Jeff Davis, senior planner for the City of Tustin.
So, while no leases have yet been signed, Bill Pope, vice president of development for the Irvine Co.’s retail division, said that he expects the center’s anchor tenants will include three to five large, high-volume retailers who offer quality goods at cut-rate prices.
The major retailers will be a mix of those selling both “soft” goods--such as bedding and clothing--and “hard” goods such as TVs, appliances and garden supplies, Pope said. They will be “one step above” the K-Mart type of discount store, with better quality merchandise appealing to a more upscale buyer, he said.
Sales Estimate
Half of the space in the center is scheduled to be opened by mid-1988 and an additional 325,000 square feet of retail space should open by late 1989. Twenty smaller retailers are expected to open in the final 75,000 square feet of space by 1992.
The Irvine Co. estimates that sales at the center next year will hit $35 million, Pope said. Gross receipts should climb to at least $60 million by 1992, the center’s first full operating year, he said.
The company’s projections are not far-fetched, according to at least one expert. “I think it’ll work,” said Robert A. Peterson, vice president of Coldwell Banker Commercial Real Estate Services. “We’ve lost Zody’s and Gemco, and all that business is still in the country. Somebody has to have it. I see all these new retailers coming in and providing an alternative” to more conventional shopping centers.
If the concept works, consumers will have a discount center that pays its own way for police and fire services, because of the revenue boost to Tustin from retail sales taxes, Pope said.
The tax revenue will also help the Irvine Co. build and sell more homes in Tustin. Under an unusual agreement between the city and company officials, the developer must provide for specific amounts of retail and hotel space in Tustin before being allowed to build additional residential units on 1,800 acres north of Interstate 5.
